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Sep 15, 2015

New Jersey Appellate Division Rules that Limo Diver is an Independent Contractor

Posted By
Todd D. Wachtel

To have a Worker’s Compensation claim in New Jersey, an injured worker
must show that their significant and permanent injuries arose from the
course of their employment. One of the defenses to Worker’s Compensation
is that the injured worker was an independent contractor, and thus, the
employer is not responsible for their injuries. The New Jersey Appellate
Division recently ruled in a case named Babekr v. XYZ Two Way Radio that
a limousine driver that was not an employee following a car accident.
This is a unique and interesting case as the driver worked under an arrangement
similar to the popular car service named Uber, which has been the subject
of much legal debate as to whether Uber drivers are employees of the company.
Here, the injured worker worked for the company since 1988 doing overnight
shifts. He used his own car and paid for the insurance. The company gave
him a computer, and when he logged in he would receive offers to pick
up passengers. Passengers had accounts with XYZ and paid fares directly
to the company, and then the company paid a percentage back to the drivers.
At the end of the year, he would get a 1099 form.

As this is an ever-evolving area of the law, the Appellate Division relied
upon a recent New Jersey Supreme Court case from 2015, named Kotsovka
v. Liebman (2015), which really synthesized the way that lawyers in New
Jersey are to look at the independent contractor versus employee debate.
In that case, the Court made a 12-part test, which included, 1) the employer’s
right to control the means and manner of the worker’s performance;
(2) the kind of occupation — supervised or unsupervised; (3) skill;
(4) who furnishes the equipment and workplace; (5) the length of time
in which the individual has worked; (6) the method of payment; (7) the
manner of termination of the work relationship; (8) whether there is annual
leave; (9) whether the work is an integral part of the business of the
“employer”; (10) whether the worker accrues retirement benefits;
(11) whether the “employer” pays social security taxes; and
(12) the intention of the parties.”

In regard to the Babekr case, the Appellate Court felt that XYZ had little
control over the passengers and trips Babekr chose to accept. They felt
that he could not really be terminated from this “job.” He
really did not receive wages, but a percentage of fares. There were no
retirement benefits nor other benefits provided by the company. Finally,
they looked back at the language of Kotsovka to determine that the injured
worker was never intended to be an employee but part of a group of subcontractors
and was not an essential part of XYZ’s business. Accordingly, the
Appellate Division agreed with the Judge of Worker’s Compensation
that Babekr was not entitled to benefits.

This is an interesting decision since other States, like California, have
ruled that Uber drivers are employees of the company and not independent
contractors. It remains to be seen if the New Jersey Supreme Court will
have the opportunity to further refine the tests for what makes up employment
for Worker’s Compensation purposes in our State.